There's in principle nothing wrong with clusters of companies that are inter-dependent on selling stuff to each other. Car parts manufacturers live and die by the big car companies - and to some degree vice versa - but we would hesitate to call that a Ponzi scheme.
The key is whether or not this clustered ecosystem is bringing in money from the outside. Somebody in the ecosystem has to be making money from the "outside" world. It's the sustainability of this outside connection that really matters.
For a lot of SaaS companies I think the rude wakeup is that the "outside" source of money was never an actual business but instead was just endless rounds of VC cash. Likewise (and IMO more offensively) with crypto the "outside" money source was hyped-up retail investors (and hyped-up VCs) and not any actual useful business.
I do agree though - the VC sphere has spent the last 10+ years building up an entire web of companies that inter-depend on each other but where the "outside money" was always highly dubious. This is distinctly unlike the older crop of BigTech companies where the outside money is (relatively) stable: actual advertising, actual hardware in people's hands...
Crypto is an almost invisible blip on the scale of the financial system. Real estate, well, there's a shortage, so I think it will take a very long time to unwind.
Dot com -- yeh, it's a mix of unsustainable Doordash/Uber/Airbnb, SaaS-for-the-SaaS market (both of which are ponzis in the context of this thread) and "AI"/"Data Science" puffery. I still can't tell if the reckoning will be quick, or if the air will simply slowly leak out.
What's the example of a company that's actually failing from this hypothesized mode of depending on other startups? I mean, better, what are five examples -- I mean, if this is a group of companies that are mutually dependent, then it can't just be one failing.
Seems like this model is beginning to fail, most YC backed IPOs are now trading in deep red. ex) coinbase
edit: lurkervizzle I can't respond to you since im throttled but this is what I wrote in response to add on to what you wrote in the other comment
this is far more serious than I thought I seemingly just made the connection that YC backed SaaS (or any other accelerator schemes) were essentially just writing cheques to each other and playing whack a mole: You direct your cohort members to send cheques to one SaaS, raise series B & C, push for IPO after making splashes on media outlets (also owned and controlled by stakeholders), which in turn generates more fervor from retail investors eager to get in on the "next" Facebook.
Then you would naturally use these beacons to essentially send more cheques, this time across many tiny bets that they can cycle through one after the other. Some make it to IPO, many don't so they get "acquired".
The more I look at the YC business model and silicon valley in general is that very small group of people are actually in it to build sustainable businesses, since the Uber secondary market successes of VCs that successfully dumped their shares on Masayoshi, the SaaS have become the new "social media opex", where losing $2 to make $1 is preferred over slower growing but consistent net profit generating ones.
By next year I anticipate ton of pain and anger. I took a look at some TC figures and they are roughly 30/70 mix of cash and RSUs. Many of those people are also in debt through real estate using HELOCs too.
What I think we are headed for is something unprecedented because there are 3 major bubbles imploding: crypto, real estate, dot com
Even more crazy is that we had the exact setup going into the new millenia: e-gold, real estate, dot com but the difference back then was that monetary supply was nowhere near as low as they have been in the past 3 years (take a look at the M2 supply/velocity chart).
https://www.pennmutualam.com/market-insights-news/blogs/char...